Q2 2024 Madison Square Garden Sports Corp Earnings Call

Operator: Good morning. Thank you for standing by, and welcome to the Madison Square Garden Sports Corp fiscal 2024 second quarter conference call. At this time, all participants are in a listen-only mode.

Good morning, Thank you for standing by and welcome to the Madison Square Garden Sports Corp. Fiscal 2024 second quarter Conference call. At this time all participants are in a listen only mode. After the Speakers' remarks, there will be a question and answer session I would now like to turn the call over to Ari Danes Investor Relations.

Operator: After the speaker's remarks, there will be a question and answer session. I would now like to turn the call over to Ari Dane, Investor Relations. Please go ahead.

Go ahead.

Ari Dane: Thank you, operator. Good morning, and welcome to MSG Sports' Fiscal 2024 Second Quarter Earnings Conference. Our president and COO, David Hopkinson, will begin this morning's call with an update on the company's strategy and operations. This will be followed by a review of our financial results with Victoria Mink, our EVP, Chief Financial Officer, and Treasurer. After our prepared remarks, we will open the call for questions. If you do not have a copy of today's earnings release, it is available in the investor section of our corporate website.

Thank you operator, good morning, and welcome to MSG Sports fiscal 2024 second quarter earnings Conference call.

Our president and C O L. David Hopkinson will begin this morning's call with an update on the company's strategy and operations.

He will be followed by a review of our financial results with Victoria Mink, Our EVP, Chief Financial Officer and Treasurer.

After our prepared remarks, we will open up the call for questions.

If you do not have a copy of today's earnings release. It is available in the investors section of our corporate website.

Ari Dane: Please take note of the following. Today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statement.

Please take note of the following.

Today's discussion may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Any such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Please refer to the company's filings with the SEC for a discussion of risks and uncertainties.

Ari Dane: Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. On pages 4 and 5 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or AOI, a non-GAAP financial measure. And with that, I'll now turn the call over to David. Thank you, Ari, and good morning, everyone.

The company disclaims any obligation to update any forward looking statements that may be discussed during this call.

On pages four and five of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or non-GAAP financial measure and with that I'll now turn the call over to David.

Yeah.

Thank you Ari and good morning, everyone.

David Hopkinson: With the 23-24 NBA and NHL seasons now more than halfway complete, I'm pleased to say that our positive operating momentum from last year carried forward into fiscal 2020. This momentum is reflected in our fiscal second quarter results, with revenues of approximately $327 million and Adjusted Operating Income of $37 million. While reported results reflect nine fewer Knicks and Rangers home games at the Garden versus the prior year period, per game revenues across nearly every key category, including tickets, sweets, food and beverage, and merchandise, were up compared to the fiscal 23 second quarter.

With the 'twenty three 'twenty, four NBA and NHL seasons, now more than halfway complete I'm pleased to say that our positive operating momentum from last year has carried forward into fiscal 'twenty four.

This momentum is reflected in our fiscal second quarter results with revenues of approximately $327 million.

And adjusted operating income of $37 million.

While reported results reflect nine fewer Knicks and Rangers home games at the garden versus the prior year period per game revenues across nearly every key category, including tickets tweets food and beverage and merchandise were up compared to the fiscal 'twenty three second quarter.

David Hopkinson: These results highlight the sustained enthusiasm we continue to see from our fans and partners and the strength of our marquee sports franchise. It also reflects our ongoing success in executing on opportunities to grow our business, including Maximizing ticket revenue through season ticket renewals, increases in ticket yield, and sales growth. Introducing new premium hospitality products and Forging Deeper Relationships with Our Future. We also continue to benefit from contractual growth in meteorites. With these successful initiatives and numerous avenues for growth ahead, we believe we are very well positioned to create long-term value for shareholders. Now, let's discuss our business in more detail. Both the Knicks and Rangers have had strong starts to their seasons. In December, the Knicks qualified for the quarterfinals of the NBA's first ever in-season tournament, followed by a significant trade for OG Inanobi, Precious Achua, and Malachi Flynn, and we've been very pleased with how the team has performed since then. More recently, we were proud to see Julius Randall and Jalen Brunson selected as 2024 NBA All-Stars. And for the Rangers, just this past weekend, Igor Shosturkin, Vincent Trochek, and our head coach, Peter Laviolette, represented us in the NHL All-Star Game with a couple of months left in the regular season.

These results highlight the sustained enthusiasm we continue to see from our fans and partners and the strength of our marquee sports franchises.

It also reflects our ongoing success in executing on opportunities to grow our business, including.

Maximizing ticket revenue through receiving ticket renewals.

Increases in ticket yield and sell through.

Introducing new premium hospitality products.

And forging deeper relationships with our fans.

We also continue to benefit from contractual growth the media rights.

With these successful initiatives and numerous avenues for growth ahead. We believe we are very well positioned to create long term value for shareholders.

Now, let's discuss our business in more detail.

Both the Knicks and Rangers had had strong starts to the seasons.

In December the next qualified for the quarter finals of the Nba's first ever in season tournament.

This was followed by a significant trade for Odeon, Adobe precious and Hewitt and Malachi Flynn.

Been very pleased with how the team has performed since then.

More recently, we were proud to see Julius Randle and killing brands in selected 2020 for NBA All stars.

And so the Rangers just this past weekend, Igor historic and Vince <unk> and our head coach Peter Laviolette represented us in the NHL All star game.

With a couple of months left to go in the regular season. Both teams are in playoff contention and we look forward to watching the remainder of the season unfold.

David Hopkinson: Both teams are in playoff contention, and we look forward to watching the remainder of the season unfold. Complimenting strong team performance has been the sustained enthusiasm from our fans. As you know, season tickets comprise a significant majority of our ticket sales, and this season, our average combined renewal rate was above 94%.

Complementing strong team performance had been a sustained enthusiasm from our fans.

As you know season tickets comprised a significant majority of our ticket revenue.

And this season, our average combined renewal rate was above 94%.

David Hopkinson: This is particularly notable as it takes into account a larger renewal base than last year and season ticket price increases for both. Combined with group tickets and individual tickets, we saw year-over-year increases in both average ticket yield and average paid attendance on a per-game basis in the fiscal sector. The enthusiasm from our fans has also been evident at the arena, with Food and Beverage and Merchandise Per Capita Spending up almost 10% as compared to the fiscal 23.

This is particularly notable as it takes into account a larger renewal base in last year.

The season ticket price increases for both teams.

Combined with group tickets, an individual tickets, we saw year over year increases in both average ticket yield and average paid attendance on a per game basis in the fiscal second quarter.

The enthusiasm from our fans has also been evidenced at the arena with food and beverage and merchandise per capita spending up almost 10% as compared to the fiscal 'twenty three second quarter.

David Hopkinson: In addition to our in-arena success, we continue to look for ways to drive deeper fan engagement and build the next generation, including through original merchandise offerings as well as exciting fan experiences and digital. On the merchandise front, we continue to focus on introducing compelling offerings that our fans value, whether it's this year's Sturbs jersey for the Rangers, their special edition jersey for next week's outdoor stadium series, or our exclusive one-off collaborations like with Siegelman Stable for The Knicks and Global Rock Band K.I.S.S. for The Rangers. Our innovative initiatives this season have generated tremendous fan interest. We also saw robust fan interest when we welcomed thousands to the NICS 23-24 season tip-off event at the Garden in October. In addition to watching the Knicks practice, this free event included a celebrity basketball game and Nick's alumni meet.

In addition to our in arena success, we continue to look for ways to drive deeper fan engagement and build the next generation of fans.

According to the original merchandise offerings as well as exciting fan experiences and digital content.

On the merchandise front, we continue to focus on introducing compelling offerings that our fans value.

Whether it's this year's third Jersey for the Rangers.

There are special edition Jersey for next week's outdoor stadium series game.

For our exclusive one off collaborations like with single and stable for the Knicks and global rock band kits for the Rangers are innovative initiatives. This season have generated tremendous fan interest.

We also saw robust fan interest when we welcomed thousands till the next 'twenty three 'twenty four season tip off events at the garden in October.

In addition to watching the next practice this free events included a celebrity basketball game and Nick's alumni meet and greets.

David Hopkinson: It also demonstrated how we've been leveraging opportunities to create engaging content for our broader audience on our digital platform. In total, content covering our season tip-off event generated more than 29 million impressions, including over 18 million video views on social media and digital platforms. We'll continue to look for unique avenues to deliver compelling content to our digital platforms that highlight our players and teams in an effort to forge stronger connections with both our avid and casual fans, turning to marketing partnerships. We've also brought in a number of new marketing partners so far this year, including Beyond Meat. Fizer

It also demonstrate how we've been leveraging opportunities to create engaging content for a broader fan community on our digital platforms.

In total content covering our seat and tip off event generated more than 29 million impressions, including over 18 million video views on social media and digital platforms.

Well continue to look for him unique avenues to deliver compelling content to our digital platforms that highlight our players and teams in an effort to forge stronger connections with both our avid and casual fans.

Turning to marketing partnerships. We've also brought in a number of new marketing partners. So far this season, including beyond meat.

David Hopkinson: Nexen Tire and Oura Ring, amongst others. At the same time, we continue to benefit from our existing agreements with our strong roster of drivers for marquee and signature cards. And this past fall, through our sponsorship sales representation agreements with MSU Entertainment, we began a new relationship with Oakview Group and Crown Properties Collections that presents new opportunities to expand our sponsorship business over the long term. In terms of premium hospitality, this fiscal year, we are seeing record-sweet revenues driven by strong new sales and robust renewal activity, as well as the addition of new premium products at the orientation. In October, the Garden opens two new event-level sweet products, which have been very well received.

Pfizer.

Next entire an aura ranked amongst others.

At the same time, we continued to benefit from our existing agreements with our strong roster of core marquee and signature partners.

And this past fall tour sponsorship sales representation agreement with MSG Entertainment, we began a new relationship with Oak view group and Crown properties collection.

That presents new opportunities to expand our sponsorship business over the long term.

In terms of premium hospitality. This fiscal year, we are seeing record sweet revenues driven by strong new sales and robust renewal activity as well as the addition of new premium products at the arena.

In October the Garden opened two new event level, III products, which had been very well received.

David Hopkinson: The first, an event-level suite, has already been licensed under a multi-year agreement, and the second, which is a luxury club space, is nearly sold out. We're pleased with our momentum in premium hospitality and remain poised for continued growth in this area of our business. Turning to media rights, we continue to benefit from increases in local and national media rights fees due to the ongoing annual contractual rate. At the same time, we continue to see enthusiasm from audiences for life. The NBA's viewership across ESPN, ABC, and TNT remains strong.

First on event level suite has already been licensed to the multi year agreement and the second which is the luxury clubs space is nearly sold out.

We're pleased with our momentum in premium hospitality and remain poised for continued growth in this area of our business.

Turning to media rights, we continue to benefit from increases in local and National media rights fees due to ongoing annual contractual rate escalators.

At the same time, we continue to see enthusiasm from audiences for live sports.

The NDA is viewership across ESPN, ABC and TNT remains strong.

David Hopkinson: And with the NBA's national media rights agreements coming up for renewal after the 24-25 season, we remain optimistic about the immediate rights opportunity ahead. At the local level, both Knicks and Rangers have seen robust viewership trends, with local ratings for both double digits compared to the same time last year. Before I turn the call over to Victoria, I'd like to touch on the recent third-party valuations across... In December, Sportico published its annual ranking of NBA team valuations, with the average team value up 33%. That same month, Forbes released its updated NHL team values, with average team values increasing 29.

And with the Nba's National media rights agreements coming up for renewal after the 'twenty four 'twenty five seasons, we remain optimistic about the media rights opportunity ahead.

At the local level, both the Knicks and Rangers have seen robust viewership trends that season with local ratings for both up double digits compared to the same time last year.

Before I turn the call over to Victoria I'd like to touch on the recent third party valuations across our leaks.

In December <unk> published its annual ranking of NBA team valuations with the average team value up 33% from last year.

That same month Forbes released its updated NFL team valuations with average team values, increasing 29% year over year.

David Hopkinson: These rising third-party valuations reflect not only the scarcity of these assets but the strong underlying business fund and significant growth opportunities for both of them, all of which reinforces our confidence in the value of owning these two iconic sports. We're pleased with how our business is performing and remain confident in our ability to deliver long-term shareholder value. With that, I'll now turn the color.

These rising third party valuations reflect not only the scarcity of these assets.

But the strong underlying business fundamentals.

And significant growth opportunities for both of our leagues.

All of which reinforces our confidence in the value of owning these two iconic sports franchises.

We're pleased with how our business is performing and remain confident in our ability to deliver long term shareholder value.

With that I'll now turn the call over to Victoria.

Victoria M. Mink: Thank you, David, and good morning, everyone. I would like to start by reviewing our fiscal 2024 second quarter financial performance and then provide an update on our balance. Results for the fiscal second quarter reflect preseason play and the start of the 23-24 regular seasons for the Knicks and Rangers. In aggregate, we hosted 32 pre- and regular-season games across both teams as compared to 41 games last year, which impacted the year-over-year comparability of results. I'd also note that our fiscal third and fourth quarters will reflect nine additional home games in total as compared to the prior year period. Turning to our results for the fiscal second quarter, total revenues were $326.9 million as compared to $353.7 million in the prior year period, which reflected the impact of fewer home games at the Garden versus the prior year, partially offset by increases across nearly every key revenue category on a per-game basis.

Thank you David and good morning, everyone.

I would like to start by reviewing our fiscal 2024 second quarter financial performance and then provide an update on our balance sheet.

Results for the fiscal second quarter reflect preseason play and the start of the 'twenty three 'twenty four regular seasons for the Knicks and Rangers.

In aggregate, we hosted 32 pre and regular season games across both teams as compared to 41 games last year, which impacted the year over year comparability of results.

I'd also note that our fiscal third and fourth quarters will reflect nine additional home games in total as compared to the prior year periods.

Turning to our results for the fiscal second quarter total revenues were $326 9 million as compared to $353 $7 million in the prior year period, which reflected the impact of fewer home games at the garden versus the prior year, partially offset by increases across <unk>.

Nearly every key revenue category on a per game basis.

Victoria M. Mink: Event-related revenues of $122.4 million, which mainly consists of ticket, food, beverage, and merchandise revenue, decreased 14% year-over-year, while suites and sponsorship revenues of $69.3 million also decreased 14% year-over-year. National and local media rights fees of $122.5 million increased 4%, primarily due to the impact of contractual rate increases on our local and national media rights deals. Adjusted operating income decreased $27.4 million to $37 million, primarily due to the decrease in revenues and, to a lesser extent, an increase in direct operating expenses partially offset by lower SG&A expenses.

Event related revenues of $122 $4 million, which mainly consist of tickets food beverage and merchandise revenue decreased 14% year over year, while suites and sponsorship revenues of $69 $3 million also decreased 14% year over year.

National and local media rights fees of $122 $5 million increased 4%.

Merrily due to the impact of contractual rate increases on our local and national media rights deals.

Adjusted operating income decreased 27 4 million to $37 million.

Primarily due to the decrease in revenues and to a lesser extent an increase in direct operating expenses, partially offset by lower SG&A expenses.

Victoria M. Mink: AOI for our fiscal 24 second quarter includes $9 million of non-cash arena license fee expense as compared to $12.2 million in the prior year period. The increase in direct operating expenses primarily reflects higher team personnel compensation as well as higher revenue sharing expenses net of escrow. This was partially offset by lower arena license fee expenses due to the nine fewer regular season games played at the Garden during the current year period and other net cost decreases. The decrease in SG&A expenses was primarily due to lower employee compensation, a result of executive management transition costs recognized in the prior year period, and lower other general and administrative expenses.

For our fiscal 2000 and for second quarter includes $9 million of noncash arena license fee expense as compared to $12 2 million in the prior year period.

The increase in direct operating expenses, primarily reflects higher team personnel compensation as well as higher revenue sharing expenses net of escrow.

This was partially offset by lower arena license fee expenses due to the nine fewer regular season games played at the garden during the current year period and other net cost decreases.

The decrease in SG&A expenses was primarily due to lower employee compensation are result of executive management transition costs recognized in the prior year period, and lower other general and administrative expenses.

Victoria M. Mink: As we look ahead, we continue to expect our business to deliver revenue growth in fiscal 24, excluding the impact of the playoffs. Our AOI will reflect the growth in revenues along with higher team operations expenses and league-related costs. Turning to our balance, as of December 31st, our cash balance was approximately $38 million, and our debt balance was $360 million. This was comprised of $275 million under the NICS Senior Secured Revolving Credit Facility.

As we look ahead, we continue to expect our business to deliver revenue growth in fiscal 'twenty four excluding the impact of the playoffs. Our ally will reflect the growth in revenues along with higher team operations expenses and legal related costs.

Turning to our balance sheet.

As of December 31, our cash balance was approximately $38 million and our debt balance was $360 million.

This was comprised of $275 million under the Knicks senior secured revolving credit facility.

Victoria M. Mink: $55 million under the Rangers Senior Secured Revolving Credit Facility and $30 million advanced from the NHL. Our cash and debt balances both reflect a total of $40 million of repayments under our Senior Secured Revolving Credit Facility during the quarter. Regarding liquidity, as of December 31st, we had $233 million of liquidity, comprised of $38 million of unrestricted cash and cash equivalents and $195 million in borrowing capacity under the Eames Revolving Credit Facility.

$55 million under the Rangers senior secured revolving credit facility and $30 million advanced from the NHL.

Our cash and debt balances both reflect a total of $40 million of repayments under our senior secured revolving credit facilities during the quarter.

Regarding liquidity as of December 31, we had $233 million of liquidity comprised of $38 million of unrestricted cash and cash equivalents and $195 million in borrowing capacity under the team's revolving credit facilities.

Victoria M. Mink: Based on the momentum we have seen in fiscal 24 and the opportunities ahead to drive long-term growth, we remain confident in the trajectory of our business. And with that, I will now turn the call back over to Auri. Thanks, Victoria. Operator, we would now like to open the call for questions. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad.

Based on the momentum we have seen in fiscal 'twenty four and the opportunities ahead to drive long term growth. We remain confident in the trajectory of our business and with that I will now turn the call back over to Ari.

Thanks, Victoria.

Greater we would now like to open the call for questions.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Ari Dane: Your first question comes from the line of David Karnovsky from J.P. Morgan. Your line is open. Hi, thanks for the question.

Your first question comes from the line of David Karnofsky from Jpmorgan. Your line is open hi.

Hi, Thanks for the question.

David Karnovsky: First, on your RSN distribution, your partner at Machine Networks has a material debt maturity coming up in October, and I wanted to see if you think there's a role or opportunity for you to play in that process, just given you're the largest cost item for them. And then secondly, on the SPHERE Jersey Patch Agreement, are there any incremental details you'd be willing to share here, financials, deal length, or maybe even just relative to the prior partnership you had there? Thank you. Hi David.

First on your resi distribution your partner MSG networks has material debt maturity coming up in October and I wanted to see if you think there is a role or opportunity for you to play in that process, just given you're the largest cost item for them and then secondly.

On the sphere Jersey patch agreement are there any incremental details you'd be willing to share here financials, DLA ends or maybe even just relative to the prior partnership you had there. Thank you.

Hi, David.

David Hopkinson: Thanks for the questions. With respect to MSG Network, so if we take a step back, you know, we all know the media landscape is evolving, but we believe strongly in the value of live professional sports content, and especially in the case of premium content like the Nixon Rangers. We're also fortunate that we operate in the nation's largest media market, so that benefits us and MSG Networks. So, we have long-term local media contracts in place with MSG Networks, agreements that provide exclusive local distribution of all of our live content, including digital.

Thanks for the questions.

With respect to MSG networks.

If we take a step back.

We all know the media landscape is evolving.

But we believe strongly in the value of live professional sports content, especially in the case with premium content like the Knicks and Rangers.

We're also fortunate that we operate in the nation's largest media market, so that benefits us and MSG networks.

So we have a long term local media contracts in place with MSG networks. The agreements that provide exclusive local distribution of all of our all of our live content, including the digital.

David Hopkinson: And they're a great partner of ours. We're supportive of what they're doing on the distribution front, including their new direct-to-consumer offering, MSG Plus. I think you know MSG Plus allows sports fans in our market that do not currently subscribe through a traditional linear TV package to access live coverage of the NFL's New York Giants.

And they're a great partner of ours, we're supportive of what Theyre doing on the distribution front.

Including their new direct to consumer offering MSG plus.

I think MSG plus allows for sports fans in our market that do not currently subscribe to a traditional linear TV package to access live Knicks and Rangers games.

David Hopkinson: So, look, we believe having sports rights has proven to be a great investment, especially over the long term, and we remain confident in that as we continue to look ahead. Your question on Sphere and The Patch, you know, we don't discuss the specifics of any individual marketing partnership detail, or, pardon me, deal, so we're not going to share any details on that. But what I will tell you is that we're proud of this agreement, which brings together two globally recognized sports entertainment brands, and we think this creates an exciting partnership right at the intersection of sports and entertainment. Thank you. Your next question comes from the line of Brandon Ross from Light Shed Partners. Your line is open.

So look we believe having having sports rights has proven to be a great investment, especially over the long term and we remain confident.

And that as we continue to look ahead.

Your question on sphere and the patch.

We don't discuss the specifics of any individual marketing partnership detail pardon me deal. So we're not sharing any details on that but what I will tell you is that.

We're proud of this agreement, which brings together two globally recognized.

Sports Entertainment brands.

And we think this creates an exciting partnership break at the intersection of sports and entertainment.

Thank you.

Your next question comes from a line of Brandon Ross from <unk> Partners. Your line is open.

Brandon Ross: All right, I'll spare you my trade deadline questions, but your stock still trades at a pretty sharp discount to PMV. I know you're bullish about the values of sports teams in the future, but right now, there's a pretty big gap to close. And you definitely have tools to help close that gap. In the past, you've talked about minority sales, and last year, you did a pretty successful buyback. Do you intend to employ any of these tools in the near future?

Alright, I'll spare you my trade deadline questions, but.

Your stock still trades at a pretty sharp discount to <unk> I know you are bullish about the values of sports teams in the future, but right now.

There is a pretty big gap to close and you definitely have tools to help close that gap in the past you've talked about minority cells and last year, you did a pretty successful buyback do you intend to employ any of these tools in the near future and just generally how do you think about closing that gap.

David Hopkinson: Generally, how do you think about closing that gap? Sure. Thanks, Brandon. Yeah, you would use the word confident.

In short order.

Sure. Thanks, Brian.

Yes, you would use the word confident and thats, how we feel and I referenced in my earlier remarks, those third party valuations, which we noted is really affirm our conviction.

David Hopkinson: And that's how we feel. And I referenced in my earlier remarks those third-party valuations, which we noticed really affirm our conviction. We agree with you, we don't think that our stock price today appropriately reflects the value of our assets, which are incredibly scarce but also have really strong business fundamentals. So specifically,

We agree with you we don't think that our stock price today appropriately reflects the value of our assets.

Which are incredibly scarce, but also with really strong business fundamentals.

So specifically yes.

David Hopkinson: Our job is to maximize ticket revenue through season ticket renewals, increases in ticket yield, and sell through; continue to build on renewal and new sales momentum in premium hospitality while also introducing new premium products like the two new event-level suites. We've got a new relationship with Oak View Group and Crown Properties Collection to maximize our valuable sponsorship inventory and expand our sponsorship business over time. And we continue to work on focusing on building new and even more direct relationships with our fans, which drive enhanced results across every aspect of our business. Our media rights are strong and continuing to benefit from annual contractual growth. And we talked about an upcoming renewal in the NBA after next season. So we're as confident as ever in the value of our team. You asked about a minority stake sale, and while we would never rule out the possibility of a minority stake sale, I have nothing to report at this time. Victoria, do you want to take this about capital allocation? Sure. Good morning, Brandon.

Our job is to maximize ticket revenue through season ticket renewals increases in ticket yield and sell through.

Continue to build on renewals and new sales momentum in premium hospitality.

While also introducing new premium products like the two new event level suites.

We've got a new relationship with Oak view group and Crown properties collection to maximize.

Our valuable sponsorship inventory.

And expand our sponsored business over time.

And we continue to work on focusing on building, new and even more direct relationships with our fans.

What's driving the enhanced results across every aspect of our business.

Our media relied scrub our media rates are strong and continuing to benefit from annual contractual growth and we talked about an upcoming renewed.

Renewal and the MBA after next season.

So we're as confident as ever in value of our teams.

You asked what are the minority stake sale and while we would never rule out the possibility of a minority stake sale I have nothing to report at this time.

Victoria do you want take that about capital allocation.

Sure Good morning, Brandon.

Victoria M. Mink: So, you know, when it comes to how we think about capital allocation and the sort of disconnect between our stock price and our values, you know, our priorities remain the same. We want to maintain appropriate liquidity to fund our operations and invest in our core business. Second, we want to make sure we have a strong balance sheet, and to that extent, we have been prioritizing debt paydown, given the high interest rate environment that we're in, including the $40 million of repayments under our senior secured revolving credit facilities that we did during this fiscal second quarter. But third, we plan to be opportunistic about our uses of our cash flow, and we'll keep all options open, right? You know, as you mentioned, last year, we did return $250 million to shareholders through the $173 million cash dividend and the $75 million accelerated share repurchase program. That leaves us today with still approximately $185 million remaining under our share repurchase authorization.

When it comes to how do we think about capital allocation.

So to the disconnect between our stock price and the values are priorities.

Remain the same first we want to maintain appropriate liquidity to fund our operations and invest in our core business.

Second we want to make sure we have a strong balance sheet and to that extent, we have been prioritizing debt paydown given the high interest rate environment that we're in.

Including the $40 million of repayments under our senior secured revolving credit facilities that we did during this fiscal second quarter.

But third we plan to be opportunistic about our uses of our cash flow and and we will keep all options open.

As you mentioned, but last year, we did return $250 million to shareholders through the $173 million cash dividend and the $75 million accelerated share repurchase program.

Leaves us today with still approximately $185 million remaining under our share repurchase authorization.

Victoria M. Mink: You know, and that first ever return of capital to our shareholders was really a reflection of the strength of our business and the confidence in the value of the sports franchises, as Hopp was talking about. And we're pleased to see that positive operating momentum is carried forward. So we feel really good about our business and the opportunities ahead to continue to drive long-term value for our shareholders. Thank you. Your next question comes from a line from Logan Angris from Wolf Research.

First ever return of capital to our shareholders was really a reflection of the strength of our business and the confidence in the value of the sports franchises as Hap was talking about.

And we're pleased to see that positive operating momentum is carried forward. So we feel really good about our business and the opportunities ahead to continue to drive long term value for our shareholders.

Excellent. Thank you so much.

Your next question comes from the line of Logan Angus from Wolfe Research. Your line is open.

Logan Angris: Your line is open. Thanks for taking the question. I guess, first, on demand, per caps, and per game revenues a little bit. I'm curious about the extent to which you are seeing the benefit from strong demand, live entertainment, and entertainment more broadly, and I guess if you could dig it a little bit more into the per capita kind of revenue. Hillens, and then.

Hi, Thanks for taking the question I guess first off.

On demand you mentioned per caps in per game revenues, a little bit I'm curious.

To what extent are you seeing the Knicks and Rangers benefit from strong demand for live Entertainment Entertainment more broadly and I guess, if you could dig in a little bit more into specifics per caps or specific.

Revenue sources that are saying.

The biggest tailwind and then in terms of costs can you provide any more color on the cost forecast for this year and.

David Hopkinson: In terms of costs, can you provide any more color on the cost forecast for this year, and do you expect the revenue growth you mentioned to outpace growth in costs? Thanks, Logan. I'll start and dig in, as you said, on the specifics of the demand and how that's translating into our business. As we said in the opening remarks, you know, we're off across almost every line on a per game basis, but with some granularity here. Ticketing. Our average season ticket renewal rate was over 94%. And again, that was on a larger renewable base and with season ticket price increases for both teams. So that's a huge lever for us. And as a result, you know, we're seeing growth in overall per game revenue, paid attendance, and total ticket yield so far this season. Or this season, pardon me.

And do you expect the revenue growth you mentioned to outpace growth in costs. Thank you.

Thanks Logan.

I'll start and dig in as you said on the specifics for the demand and how that's translating into our business.

As we said in the opening remarks, we're off across almost every line on a per game basis, but.

With some with some granularity here.

Ticketing.

Our average season ticket renewal rate.

With over 94% and again that was on a larger renewable base and with season ticket price increases were both teams. So that's a huge lever.

For us and as a result, we're seeing growth in overall per game revenue.

Paid attendance and total ticket yield so for the seasons of the season Permian.

David Hopkinson: If I think about the Swedes... We're seeing record revenues from suites driven by both strong new sales and robust renewal activity. And we're also benefiting from the addition of those two new event-level suites at the Garden. On sponsorship, we've welcomed a number of new partners this year, joining our strong roster of signature partners, and looking to continue. We've also got headroom here.

But if I think about suites.

We're seeing record revenues from suites, driven by both strong new sales.

And robust renewal activity and we're also benefiting from the addition of those two new event level suites at the garden.

On sponsorship we welcomed a number of new partners. This year, joining our strong roster of signature partners.

And looking to we've also got headroom here, we look to continue to pursue valuable growth opportunities. The Jersey patched for the Rangers international sponsorship for the mix.

David Hopkinson: We look to continue to pursue valuable growth opportunities, the Jersey patch for the Rangers, and international sponsorship for the Knicks. We're focused on maximizing the value of these opportunities. And that's one of the reasons that we've entered our new relationship with Oakview Group and Crown Properties Collection, who we believe will help us expand this area of the business over the long term. We're also really focused on fan engagement and driving deeper relationships with fans, which result in enhanced performance across every aspect of our business. So, you know, things like that third jersey for the Rangers, the special edition jersey that we're going to wear next week at the outdoor game, the NHL Stadium Series, our Stegelman's table collection with the Knicks, the partnership we did, the merchandise partnership we did with KISS.

We're focused on maximizing the value of these opportunities and Thats one of the reasons that we bettered our new relationship with <unk> group and Crown properties collection.

We believe will help us expand this this area of the business over the long term.

We're also really focused on fan engagement and driving deeper relationships with fans.

Resulting in enhanced.

Performance across every aspect of our business so things like the third Jersey for the Rangers. The Special edition Jersey that we're Gonna aware next week at the outdoor game with DHL Stadium series.

Our siegelman stable collection with the mix the partnership we did.

The merchandise partnership we did with <unk>.

David Hopkinson: These are all things that excite and engage our fans and one of the reasons that we're experiencing food and beverage and merchandise per capita spending, which is up almost 10% over the same period last year. So we're really bullish on our business for the remainder of this fiscal year and beyond. Victoria, do you want to take the second half of that question? Sure. Good morning, Logan.

Yes.

These are all things that.

Excite and engage our fans and one of the reasons that we are still experiencing food and beverage and merchandise per capital spending which is up almost 10% over the same period last year.

So we're really bullish on our business for the remainder of this fiscal.

And beyond.

Mature you will take the second half of that question sure. Good morning, Logan. So let me talk a little bit about revenue and expenses.

Victoria M. Mink: So let me talk a little bit about revenue and expenses in this fiscal year. So, you know, taking a step back, we do expect to, again, deliver robust revenue growth on a year over year basis, excluding the impact of the playoffs. And as you can see in our second quarter results today, we saw higher average per game revenues across tickets, suites, Food and Beverage, and Merchandise.

Our fiscal year, so im taking a taking a step back we.

We do expect to again deliver robust revenue growth on a year over year basis, excluding the impact of the playoffs.

You can see in our second quarter results today, we saw higher average per game revenues across tickets suite.

Food and beverage and merchandise.

Victoria M. Mink: You know, we're seeing overall positive momentum across our business and expect that to continue for the remainder of the fiscal year. Now, while we're not providing more specific AOI guidance, as I mentioned earlier, AOI this fiscal year will reflect the growth in these revenues, but in addition, there'll be the impact of higher team operation expenses and league-related costs. So what that really includes is, you know, number one, the impact of our current rosters. As a reminder, the NHL salary cap is a modest increase from $82.5 million to $83.5 million. Now, on the NBA side, the salary cap is increased by over $12 million to $136 million this season. And so in addition to those costs, you know, we're also expecting higher revenue sharing expenses and lower projected luxury tax receipts. You know, but based on the momentum we've seen, we remain confident in the trajectory of our business this fiscal year. Your next question comes from... Your next question comes from the line of Paul Golding from Macquarie Capital. Your line is open. Thanks so much.

So we are seeing overall positive momentum across our business and expect that to continue for the remainder of the fiscal year.

Now, while we're not providing more specific guidance as I mentioned earlier this fiscal year will reflect the growth in these revenues, but in addition, there'll be the impact of higher team operation expenses and league related costs.

So what that really includes is number one the impact of our current rosters. So as a reminder, the NHL salary caps or a modest increase from $82 5 million to $83 5 million now while on the NDA side, the salary cap increased over $12 million.

Two $136 million. This season. So in addition to those costs.

We're also expecting higher revenue sharing expense.

And lower projected luxury tax receipts.

With that based on the momentum we've seen we remain confident in the trajectory of our business this fiscal year.

Your next question comes from.

Your next question comes from the line of Paul Golding from Macquarie Capital. Your line is open.

Paul Golding: Just had a quick question on the ticket sales commentary. You mentioned that combining group and individual average ticket yields were up in fiscal 2Q year on year. I was wondering if you could break that down a bit more for us, just in terms of how the group is faring relative to the individual in making up that yield comment.

Thanks, So much just had a quick question on the ticket sales commentary you mentioned that combine in group and individual average ticket yields were up in fiscal Q2 year on year. I was wondering if you could break that down a bit more for us just in terms of how group is fairing.

To individual and making up that yield comment and then secondly, just around sponsorship.

David Hopkinson: And then, secondly, just around sponsorship demand, a similar question for year-to-date or balance of the year, any commentary on the mix, in other words, where you're seeing the strength come through, whether it's signage, ads, or otherwise. Thank you.

Demand a similar question for.

Year to date or a balance of the year any commentary on the mix in other words, where youre seeing.

The strength come through whether it's signage.

<unk>.

Otherwise thank you.

David Hopkinson: I'll talk about the tickets first. As I mentioned, our average combined renewal rate for season ticket packages this season was over 94 percent. And again, I think that's really noteworthy considering we had both a larger renewal base and season ticket price increases for both teams. And we were strong last year where we renewed over 90%, but the 94% is, we're really pleased to bet. So with the larger season ticket base comes a reduced amount of individual tickets available per sale, but we're seeing both individual and group ticket sales also continue to be really strong. Average paid attendance for groups is up year over year. And overall, including season tickets, average per game paid attendance is up as well. So our higher overall average ticket yield this year, and I think this is really a combination of the enthusiasm we're seeing from our fans and the continued improvement in tourism. Here in New York, post-pandemic, we just have really good momentum on the ticketing front.

Thanks, Paul.

The type of the tickets first.

So as I mentioned, our average combined renewal rate for season ticket packages. This season was over 94% and again I think thats really noteworthy considering we had both the large.

Pardon me the larger renewable base and season ticket price increases for both teams.

And we were strong last year's where we renewed over 90%, but the 94% is we're really pleased about so with the larger season ticket based comes a reduced amount of individual tickets available per sale.

But we're seeing both individual and group ticket sales also continued to be really strong.

Average paid attendance for groups is up year over year and overall, including the season tickets average per game paid attendance is up as well so our higher.

Overall, we've got a higher overall average ticket yield this year and I think this is really a combination of the enthusiasm we're seeing from our fans and the continued improvement in tourism here in New York Post pandemic, we just have really good momentum on the ticketing front.

David Hopkinson: We're seeing that shine through in the suites as well, where we've got really robust demand from our corporate partners renting suites and licensing those suites on a long-term agreement. We saw that again, and we capitalized on that with the two new event-level suites we introduced for this season, one of which has direct access, and one of which has indirect access to the bowl in a luxury sort of a club style suite. The direct access suite that we licensed on a multi-year agreement and that club space is almost sold out. I referenced some of the new sponsorships that we have introduced this year, Oura Ring, Pfizer, Nexen Tire, and our new partnership with Opie Group and Crown Properties, which we believe will help us grow that business even further in the weeks, months, and years to come. Great, thanks so much.

We're seeing that.

Shine through in the suites, as well, where we've got really robust demand from our corporate partners renting suites.

And licensing those suites and long term agreements.

We saw that again.

And we capitalize on.

The two new event level suites, we introduced for this season, which has direct access in one of which has indirect access to the board.

<unk> from a club style suite.

The direct access we licensed in a multiyear agreement that club space.

Is almost sold out.

I referenced some of the new sponsorships that we have introduced this year.

Ring Pfizer Nexen tire.

And our new partnership with <unk> group and Crown properties, we believe.

It will help us grow that business even further.

Weeks months and years to come.

Great. Thanks, so much.

David Hopkinson: Operator, we have time for one last caller. Our final question comes from a line David Joyce from Seaport Research Partners. Your line is open.

Operator, we have time for one last caller.

Our final question comes from the line of David Joyce from Seaport Research Partners. Your line is open.

David Joyce: Thank you. Going back to the upcoming NBA National Rights Renewal, which should come with a significant step up, could you please help us understand what of the incremental flows from that new contract come to the teams versus to the players? And also, are there other structural changes in the rights, be it local or digital or otherwise, that you might expect, perhaps influenced by the issues that some other RSNs are facing?

Thank you going back to the upcoming NBA international rates renewal, which should come with a significant step up could you. Please help us understand what are the incremental flows from that new contract comes to the teams versus to the players.

Also are there other structural changes in the rates, we had local where digital or otherwise that you might expect.

Perhaps influenced by the issues that some other <unk>. Thank you.

David Hopkinson: Thank you. Great. Good morning, David.

Great.

Victoria M. Mink: So, looking at the NBA's national rights renewal, so I guess first as a reminder, the current national deals run through the 24-25 season, so we're talking about our fiscal 2026 period. But, you know, in terms of the potential financial impact, all teams across the league will share equally in any potential increase in the national media rights fees. But as you know, and you alluded to, the players also receive approximately 50% of all league-wide revenues, which does include national media rights fees, and therefore would include any potential increase there.

Good morning, David So.

Looking at the National the NBA National rights renewal. So I guess first as a reminder, the current national deals run through the 'twenty four 'twenty five season. So we're talking about our fiscal 2026 period.

But in terms of the pipe the potential financial impact. So all teams across the league will share equally in any potential increase in the national media rights fees.

And as you know when you alluded to the players also receive approximately 50% of all Leaguewide revenues, which would include the national which does include the national media rights fees and therefore would include any potential increase there.

Victoria M. Mink: You know, and regarding the sort of the second part of your question there, you know, and I think it's hot when it's talked about, too. You know, we think it's clear that the media landscape is evolving, and we continue to believe in the value of live professional sports content. And we expect the NBA will maximize that opportunity. But specifically in terms of local rights, as you know, we have long-term contracts in place with MSG Networks, and those contracts run through the 20, 34, and 35 seasons. So, I have about 11 years left.

And regarding the second part of your question there.

I think a top has talked about too.

It's clear that the media landscape is evolving and we continue to believe in the value of live professional sports content.

We expect the NBA will maximize that opportunity.

But specifically in terms of local right as.

As you know we have long term contracts in place with MSG networks and those contracts run through 2034 35 seasons. So about 11 years left.

Victoria M. Mink: Yeah, so that's where, you know, our games will be shown locally. All right, thank you. This concludes our question and answer session. I will now turn the call back over to Mr. Ari Danes for some closing remarks. Thank you all for joining us. We look forward to speaking with you on our next earnings call. Have a good day. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Yes, so that's where our games will be shown locally.

Alright, thank you.

This concludes our question and answer session I will now turn the call back over to Mr. Ari Danes for some closing remarks.

Thank you all for joining US we look forward to speaking with you on our next earnings call have a good day.

This concludes today's conference call. Thank you for your participation you may now disconnect.

[music].

Yes.

Okay.

[music].